Nokia shows signs of life after its bet on Lumia devices starts to pay off

Shares of the Finnish telco giant surge on news of $5B in sales at end of 2012.

As recently as earlier this month, we speculated that Nokia may not make it to 2014. And that wasn’t just a random prediction—it’s no secret Nokia’s revenues have been tanking for some time now. The company’s rating was downgraded in April 2012, which prompted the Finnish giant to sell its corporate headquarters (only to lease them back again) as a way to get some much-needed cash in early December 2012.

But investors were happily surprised on Thursday morning, when Nokia announced its fourth-quarter 2012 results were much better than expected—with its quarterly sales reaching 86.3 million devices, including 6.6 million smartphones. Two-thirds of those were Windows-based Lumia phones.

Combined with other services, quarterly sales reached €3.9 billion ($5.09 billion), which sent shares soaring by 16 percent, reaching nearly €3.50 per share by mid-afternoon in Europe. Overall however, Nokia’s stock lost 22 percent on the year in 2012, its fifth consecutive annual decline.

“This is clearly very positive news from Nokia as it both shows that the company’s new Lumia product launches are performing well and that the [Nokia Siemens Networks] business has gained good momentum,” Louis Landeman, an analyst at Danske Bank A/S in Stockholm, told Bloomberg. “The company’s restructuring programs are reducing costs faster than expected.”

The news agency also noted that the cost of insuring Nokia’s bonds using credit-default swaps—a type of quasi-financial insurance—has been cut in half since July, reaching 610 basis points by the end of Thursday in London.

I bought some Nokia stock around 2 bucks because I felt the company still had life left. After 3 days of a slide early this week and some very scary reports about their financials, I sold my stock and took the 45% gain on my investment. Now I am kicking myself because 2 days later, I find out I was right all along, and I now I lost out on an even bigger return. That's what I get for not sticking with my gut and listening to financial articles written by people who don't know much about technology.

I bought some Nokia stock around 2 bucks because I felt the company still had life left. After 3 days of a slide early this week and some very scary reports about their financials, I sold my stock and took the 45% gain on my investment. Now I am kicking myself because 2 days later, I find out I was right all along, and I now I lost out on an even bigger return. That's what I get for not sticking with my gut and listening to financial articles written by people who don't know much about technology.

As nice as all of that might sound, one of anecdotes like this, tell us little about your ability to predict stock movement. You could just as likely have been wrong. Gut feeling are a bad way to invest money

I bought some Nokia stock around 2 bucks because I felt the company still had life left. After 3 days of a slide early this week and some very scary reports about their financials, I sold my stock and took the 45% gain on my investment. Now I am kicking myself because 2 days later, I find out I was right all along, and I now I lost out on an even bigger return. That's what I get for not sticking with my gut and listening to financial articles written by people who don't know much about technology.

Sorry to hear that.

I got a bunch of their stock back when they bottomed out (I think that it was around the $2 mark) and have held on to them since. Can't say I wasn't tempted to back out, but I also felt like pulling out would only contribute to their stock devaluing. So, seeing this news makes me quite glad I kept in. I bought the stock too back when everyone said it would be a waste of money. Honestly, I understood that, so I played it a little safe: I only purchased as much stock as I was willing to write off as a loss, and it was cheap enough that it was little lost, to begin with. Looking at their long-term history, if they turned around and their stock went back up to even close to where it used to be, I could be making a 10x gain on my investment, which isn't too shabby.

I bought some Nokia stock around 2 bucks because I felt the company still had life left. After 3 days of a slide early this week and some very scary reports about their financials, I sold my stock and took the 45% gain on my investment. Now I am kicking myself because 2 days later, I find out I was right all along, and I now I lost out on an even bigger return. That's what I get for not sticking with my gut and listening to financial articles written by people who don't know much about technology.

Be thankful you gambled and won. Nokia is already predicting a flatline to negative Q1 - that should be priced into the stock, but stocks prices, despite economists' theories, are fickle things. Hopefully 4 million Lumias and 2 million Ashas is something they can build on.

Dediu addressed the seasonality and found almost none:

"My forecast for Windows Phone was 15 million (through Q4/2012) and the 14 million actually shipped is not far off. However, note that the sequential growth into the fourth quarter was lower than the same period last year. For the holiday quarter Nokia received almost no boost. If there is reason to be optimistic it’s that there wasn’t a decline in overall smartphones into Q4."

4th quarter was the release of the 920 and 800 series phones. That was pretty late to see a holiday boost, though, so perhaps that was why the uptick was so gradual. Mind you, Samsung didn't even get their WP8 phone out in 4Q.

I'm really glad to read this. I know we Lumia fans can be a bit militant, but it's driven by a very strong appreciation for what is, in our opinion, an under appreciated device.

For anyone on the fence, the Lumia line is worth a look. I'm amazed at how well it integrates with my iPad, and I'm still excited to use the phone and discover new features. I'm glad Nokia's gamble has born success, in the short term at least.

Im pretty glad Nokia is turning around but i ask myself was the downturn really that unavoidable?Im looking at you Elop!

The downturn was at full steam long before Elop joined the company.

Yup!

The "platform on fire" thing.

(I guess most people misunderstood that, what Elop meant was that Nokia was like an oil platform on fire and drastic immediate action was needed to save it.)

Yea, we never saw it in the states because Nokia was quickly edged out by Motorola and Apple in the late 00s, but Meego was Nokia's Copland moment. That is, they were scrambling to get on a software platform that had a future but couldn't keep it together internally. Their hardware was fantastic, like Apple's at the same time in the late 90s, but the software was holding it all back. Windows Phone was a risky jump but it's likely paying off. It was either get in the ground floor with Microsoft on a platform that had the potential to take off or tank hard, or become Yet Another Android Manufacturer. As customers we should be happy that Nokia had some balls to do something really risky and create some more diversity that's sorely needed at this point.

"As recently as earlier this month, we speculated that Nokia may not make it to 2014."

There is a reason tech bloggers are not running companies. Stop trying to do things you are not good at. Write about *facts* about gadgets instead. That's what most readers are here for. All those "editorials" by tech bloggers are worthless and only make the writers look silly.

"As recently as earlier this month, we speculated that Nokia may not make it to 2014."

There is a reason tech bloggers are not running companies. Stop trying to do things you are not good at. Write about *facts* about gadgets instead. That's what most readers are here for. All those "editorials" by tech bloggers are worthless and only make the writers look silly.

There's great evidence that the people running those companies should stop trying to do things they are not good at, either.

I'm happy to see those editorials and some upper level thought about the tech industry instead of nonstop mindless fanboy drooling and partisanship. Sure I'm glad to read that the new Galaxy has a quad core something or other. And about the thousandth time I read a chip speed stat (which occurred for me roughly 7 years ago) I had read enough for a lifetime. Yes, it needs to be there, I guess. But if I want raw numbers, I'll stick to spec sheets and so should you.

Journalists are for the editorial part: the 'bias' the 'judgement' the 'context' and definitely the 'opinion'. If Peter Bright just dropped Lumia specs, why would I come here? I want something to think about and discuss. Even Tom's Hardware doesn't publish numbers with no text, it's pointless until we're all server bots run by financial firms.

"As recently as earlier this month, we speculated that Nokia may not make it to 2014."

There is a reason tech bloggers are not running companies. Stop trying to do things you are not good at. Write about *facts* about gadgets instead. That's what most readers are here for. All those "editorials" by tech bloggers are worthless and only make the writers look silly.

If you think anyone here at Ars, who tends to be a pretty bright group on the whole, would invest in stocks recommended by a tech site vs. a real financial institution you would probably be very very wrong.

I bought some Nokia stock around 2 bucks because I felt the company still had life left. After 3 days of a slide early this week and some very scary reports about their financials, I sold my stock and took the 45% gain on my investment. Now I am kicking myself because 2 days later, I find out I was right all along, and I now I lost out on an even bigger return. That's what I get for not sticking with my gut and listening to financial articles written by people who don't know much about technology.

Bought at the absolute bottom (~$1.70), sold out around $2.50 when it looked like the party was over, then doubled down at $2.95 right before it rocketed through $3.00

I bought some Nokia stock around 2 bucks because I felt the company still had life left. After 3 days of a slide early this week and some very scary reports about their financials, I sold my stock and took the 45% gain on my investment. Now I am kicking myself because 2 days later, I find out I was right all along, and I now I lost out on an even bigger return. That's what I get for not sticking with my gut and listening to financial articles written by people who don't know much about technology.

As nice as all of that might sound, one of anecdotes like this, tell us little about your ability to predict stock movement. You could just as likely have been wrong. Gut feeling are a bad way to invest money

My gut feeling was based on my personal belief that Nokia was going to put out a good product that people would want. I was personally already on board with Windows Phone 8 as a viable platform. I honestly think it is the best mobile platform out there, other than its lack of 3rd party apps at this time. (this is coming from an iPhone 4s and Galaxy S3 owner). I agree gut feelings are a bad way to invest money, but gut feelings also tend to bring much bigger results if things do pan out the way you hope.

I will just be happy to take the gain I got on it, but I will still be mad at myself for listening to the hype from some of these investment sites' articles on how the company was doomed.

I don't think Nokia will be selling their headquarters every quarter, so some of you may want to see how much of the profit that sale accounted for before investing.

Selling an asset isn't profit, it's cash flow. If they sold it for more than they bought it for, then it is profit on the difference. When you sell it so that it is leased back to you, the chance of "profit" seems low. Are you really, really saying that you believe that the vast majority of their third quarter profit is from the mortgaging of the building?

Whether or not you like Windows Phone or Microsoft, this should be seen as a good thing - simply because competition drives innovation, which benefits everyone.

Having said that, I can't immediately think of a feature that originated in Windows Phone first before being borrowed for iOS and/or Android but I'm sure someone closer to the platform can come up with something.

Finally, we have been successful at making Windows Phone-based smartphones sell more than our other smartphones. It's been a long, hard fight, and we had to cheat to win, but in the end it was worth it.

Whether or not you like Windows Phone or Microsoft, this should be seen as a good thing - simply because competition drives innovation, which benefits everyone.

Having said that, I can't immediately think of a feature that originated in Windows Phone first before being borrowed for iOS and/or Android but I'm sure someone closer to the platform can come up with something.

Android's People app was copied from Windows Phone. iOS's social integration, as well as using a physical button for taking pictures (up volume) and fast access to the camera from the lock screen were copied from WP.

Whether or not you like Windows Phone or Microsoft, this should be seen as a good thing - simply because competition drives innovation, which benefits everyone.

Having said that, I can't immediately think of a feature that originated in Windows Phone first before being borrowed for iOS and/or Android but I'm sure someone closer to the platform can come up with something.

Android's People app was copied from Windows Phone. iOS's social integration, as well as using a physical button for taking pictures (up volume) and fast access to the camera from the lock screen were copied from WP.

"Nokia sold 4.4 million Lumia smartphones in the fourth quarter, rising from the third quarter’s 2.9 million."

Q4 is when the new phones and WP8 came out, and the bump from that as compared to the Osborned phones was only 1.5 million? Am I the only one here who doesn't find these numbers impressive?

I mean it's good that the number actually went up for a change, but this was the holidays and a launch, and that's it? They're not going to be a major player in the smartphone market with those numbers.

Whether or not you like Windows Phone or Microsoft, this should be seen as a good thing - simply because competition drives innovation, which benefits everyone.

Having said that, I can't immediately think of a feature that originated in Windows Phone first before being borrowed for iOS and/or Android but I'm sure someone closer to the platform can come up with something.

Ahem, I don't remember ever reading about an iPhone with Live Tiles...

Android's People app was copied from Windows Phone. iOS's social integration, as well as using a physical button for taking pictures (up volume) and fast access to the camera from the lock screen were copied from WP.

Wasn't the Windows Phone people stuff taken from the Palm Pre's Synergy?

Not entirely convinced that the volume up button on the camera app is much of an achievement to talk about - but I could get behind the quick access to the camera on the lock screen.

Having said that, I can't immediately think of a feature that originated in Windows Phone first before being borrowed for iOS and/or Android but I'm sure someone closer to the platform can come up with something.

Ahem, I don't remember ever reading about an iPhone with Live Tiles...

Neither have I, so it doesn't count as an original Windows Phone feature that iOS has borrowed.

"Nokia sold 4.4 million Lumia smartphones in the fourth quarter, rising from the third quarter’s 2.9 million."

Q4 is when the new phones and WP8 came out, and the bump from that as compared to the Osborned phones was only 1.5 million? Am I the only one here who doesn't find these numbers impressive?

I mean it's good that the number actually went up for a change, but this was the holidays and a launch, and that's it? They're not going to be a major player in the smartphone market with those numbers.

In the established mobile landscape of Android and iOS, yeah I think those numbers are pretty good for a new OS on a new phone. I would say they are at least comparable to Samsung numbers when they first started putting out Android handsets to go against the iPhone. Now there is even more competition in the mobile landscape.

Great news. Also, reports out of China are that WP8 devices, and Lumia specifically, are selling as fast as they can be delivered. Nokia still has a great name there, Chinese friends of mine in the US immediately got Lumia phones once they became available last year, and it appears to me that Nokia is capitalizing on that.

I don't think Nokia will be selling their headquarters every quarter, so some of you may want to see how much of the profit that sale accounted for before investing.

Selling an asset isn't profit, it's cash flow. If they sold it for more than they bought it for, then it is profit on the difference. When you sell it so that it is leased back to you, the chance of "profit" seems low. Are you really, really saying that you believe that the vast majority of their third quarter profit is from the mortgaging of the building?

It sounds ludicrous to me.

Happens all the time. If you sell an asset for more than it's Book value (not the amount you paid for it!) you will record a one time profit. If they had their building 20 years they could have a large profit.

The sale is not mentioned in the 6-K they filed, so may be immaterial to their results or hasn't closed yet.

People interested in Nokia and able to handle a lot of derision should check out Tomi Ahonen's blog:

thhh wrote:

Alternative view to this release

Tomi Ahonen is not a man to be trusted. He only ever references himself as a source and deletes/bans comments that question his methods. He also has this notion that everything was absolutely peachy at Nokia until Elop came along.

I bought some Nokia stock around 2 bucks because I felt the company still had life left. After 3 days of a slide early this week and some very scary reports about their financials, I sold my stock and took the 45% gain on my investment. Now I am kicking myself because 2 days later, I find out I was right all along, and I now I lost out on an even bigger return. That's what I get for not sticking with my gut and listening to financial articles written by people who don't know much about technology.

Those financial analysts don't know anything about technology or finances, they are all full of shit and their analysis sucks. If you know the sector and know a company's history, I'd say that you should stick to your gut feeling when it comes to stocks.

Im pretty glad Nokia is turning around but i ask myself was the downturn really that unavoidable?Im looking at you Elop!

Symbian was already tanking when he came on board, and Meego was nowhere near ready. The only choices were Android or Windows Phone. With Samsung and HTC already carving up the lion's share of the Android market between them, Windows Phone was the only viable option.

I don't think Nokia will be selling their headquarters every quarter, so some of you may want to see how much of the profit that sale accounted for before investing.

Selling an asset isn't profit, it's cash flow. If they sold it for more than they bought it for, then it is profit on the difference. When you sell it so that it is leased back to you, the chance of "profit" seems low. Are you really, really saying that you believe that the vast majority of their third quarter profit is from the mortgaging of the building?

It sounds ludicrous to me.

Happens all the time. If you sell an asset for more than it's Book value (not the amount you paid for it!) you will record a one time profit. If they had their building 20 years they could have a large profit.

The sale is not mentioned in the 6-K they filed, so may be immaterial to their results or hasn't closed yet.